Yum Brands (YUM) Risk Factor Changes

We have initiated a process to explore strategic options for our Pizza Hut brand to maximize long-term value creation.

by, negative macroeconomic conditions in certain markets where we and our Concepts’ franchisees operate, including impacts from increased commodity prices and other inflationary pressures, elevated interest rates, cha…

Our business may be adversely impacted by changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and interest rate conditions, in markets in which we operate.

We received opinions of outside counsel substantially to the effect that, for U.S.

In addition, if jurisdictions in which we or our Concepts operate enact tax legislation, modify tax treaties and/or increase audit scrutiny, it could increase our taxes and have an adverse impact on our financial resu…

We are subject to income taxes as well as non-income based taxes, such as payroll, sales, use, value-added, net worth, property, withholding and franchise taxes in various jurisdictions.

We may also be adversely impacted by legal developments resulting in broader standards for determining when two or more entities may be found to be joint employers of the same employees under laws such as the National…

We are regularly involved in legal proceedings, which include regulatory claims or disputes by claimants such as franchisees, suppliers, employees, customers, governments and others related to operational, commercial,…

or policies.

Our success and growth strategy depends in large part upon our ability and our Concepts’ franchisees’ ability to maintain and enhance our corporate reputation and the value and perception of our brands.

Our and our Concepts’ franchisees’ businesses depend on reliable sources of large quantities of raw materials such as proteins (including poultry, pork, beef and seafood), cheese, oil, flour and vegetables (including…

An increase in food prices and other operating costs may adversely impact our business and/or our growth prospects.

The inability to recruit and retain a sufficient number of qualified individuals at the store level, coupled with increased labor costs, may result in reduced operating hours, have a negative impact on service or cust…

We may also be targets of infringement claims that could interfere with the use of certain names, trademarks, works of authorship, and/or the proprietary technologies, inventions, recipes, or trade secrets used in our…

In addition, effective intellectual property protection may not be available in every country in which our Concepts have, or may in the future open or franchise, a restaurant and the laws of some countries do not prot…

We rely on a combination of legal protections, including trademark registrations, contractual terms, copyrights, patents and common law rights, such as unfair competition, passing off and trade secret laws to protect…

We regard our registered trademarks (e.g., Yum!

In addition, social media is frequently used by our Concepts or Concepts’ franchisees to communicate with customers and the public.

There has been a marked increase in the use of social media platforms and websites, including blogs, chat and messaging platforms, video-sharing platforms, and other forms of Internet-based communications which allow…

If the third-party aggregators that we utilize for delivery, cease or curtail their operations, fail to maintain sufficient labor force to satisfy demand, provide poor customer service, materially change fees, access…

We continue to allocate significant resources to develop, accelerate and implement our digital, technology, and innovation capabilities, including various AI capabilities.

Moreover, technology and consumer offerings continue to develop, and our failure to adequately invest in or implement new technology (e.g., automation, AI, new delivery channels) or adapt to technological advancements…

We and our Concepts’ franchisees rely heavily on IT Systems to efficiently operate our restaurants and drive the customer experience, sales growth and margin improvement, as well as to gather and leverage data to enha…

The Federal Trade Commission (“FTC”) and many state attorneys general are also interpreting federal and state consumer protection laws to impose standards for the collection, use, dissemination and security of persona…

Data privacy is subject to frequently changing legal requirements, which sometimes conflict among the various jurisdictions where we and our Concepts’ franchisees do business.

Further, the payment card industry sets controls standards used in the transmission and approval of electronic payment transactions.

our financial results and growth prospects, damage our brands and reputation, cause interruption of normal business operations, cause us to incur substantial costs, result in a loss of consumer confidence and sales, d…

We are regularly the target of cyber-attacks and other attempts to breach, or gain unauthorized access to, our systems and data.

Our results of operations, growth prospects and the value of our assets are affected by fluctuations in currency exchange rates, which have had, and may continue to have adverse effects on our reported earnings.

As a result of our global operations, we have significant exposure to geopolitical events and instability.

A meaningful portion of our total business, particularly with respect to our KFC Concept, is conducted in mainland China through our largest franchisee, Yum China.

(iv)the possibility that we have acquired substantial contingent or unanticipated liabilities in connection with acquisitions or other strategic transactions.

From time to time we have completed, and we may evaluate and continue to complete, mergers, acquisitions, divestitures, joint ventures, strategic partnerships, minority investments and other strategic transactions.

Expansion could also be affected by our Concepts’ franchisees’ willingness to invest capital or ability to obtain financing to construct and open new restaurants.

Our growth strategy depends on our and our Concepts’ franchisees’ ability to increase the number of restaurants around the world.

We have franchise relationships that are particularly important to our business due to their scale and/or growth prospects such as our relationship with Yum China, our largest franchisee.

Franchisee noncompliance with our franchise agreements and/or or brand standards including by failing to meet health and safety standards, to engage in quality control or maintain product consistency or to comply with…

If our Concepts’ franchisees fail to adequately capitalize their businesses or incur too much debt, if their operating expenses or commodity prices increase or if economic or sales trends deteriorate such that franchi…

In addition, our operations could be disrupted if any employees at our or our Concepts’ franchisees’ restaurants had or were suspected of having avian flu or swine flu, or other highly communicable illnesses, since th…

Our business and/or growth prospects could be adversely impacted by various catastrophic or other unforeseen events (which may be beyond our control), including health epidemics or pandemics, natural disasters, geopol…

•increasing our exposure to risks related to fluctuations in foreign currency as we earn profits in a variety of currencies around the world and our debt is primarily denominated in U.S.

•imposing restrictive covenants on our operations due to the terms of our indebtedness, which, if not complied with, could result in an event of default, which if not cured or waived, could result in the acceleration…

•limiting our ability to borrow additional funds in the future and increasing the cost of any such borrowing;

•making it more difficult for us to repay, refinance or satisfy our debt obligations;

•increasing our exposure to the risk of discontinuance, replacement or modification of certain reference rates;

•increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest or we are forced to refinance indebtedness at higher interest rates,…

•placing us at a disadvantage compared to other less leveraged competitors or competitors with comparable debt at more favorable interest rates;

•restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

•increasing our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets;

•requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing or eliminating the availability of such cash flow to…

•increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment;

As of December 31, 2024, our total outstanding short-term borrowings and long-term debt was approximately $11.4 billion.

We received opinions of outside counsel substantially to the effect that, for U.S.

•Public company compliance, disclosure and governance matters.

•Federal and state immigration laws and regulations in the U.S.

•Environmental laws and regulations, including with respect to climate change and greenhouse gas emissions.

•Anti-bribery and anti-corruption laws, including the U.S.

•Laws relating to international trade and sanctions.

•Laws relating to currency conversion or exchange.

•Laws relating to our use of third party aggregators.

•Laws relating to information and data security, privacy, cashless payments, consumer protection, and the use of AI and other emerging technologies.

•Laws and regulations relating to union organizing rights and activities.

•Laws and regulations relating to health, sanitation, food, workplace safety, child labor, including laws regulating the use of certain “hazardous equipment”, building and zoning, and fire safety and prevention.

•Laws relating to the relationship between franchisors and franchisees.

•Laws relating to state and local licensing.

•Laws and regulations relating to nutritional content, nutritional labeling, product safety, product marketing and menu labeling.

•Laws and regulations in government-mandated health care benefits such as the Patient Protection and Affordable Care Act in the U.S.

•Various laws related to employment, including the U.S.

•The Americans with Disabilities Act in the U.S.

The Company, and our Concepts and their franchisees, are subject to numerous laws and regulations around the world.

reporting with respect to social and environmental matters are incomplete or inaccurate, or if we or our Concepts’ franchisees fail to achieve progress with respect to these goals on a timely basis, consumer and inves…

Our success depends in large part upon our ability and our Concepts’ franchisees’ ability to maintain and enhance our corporate reputation and the value and perception of our brands, and a key aspect of our growth str…

Concepts and their franchisees, including due to the payment of higher wages to attract or retain qualified employees (including franchisee management, restaurant managers and other crew members) and due to increased…

In addition, our restaurant operations are highly service-oriented, and our success depends in part on our and our Concepts’ franchisees’ ability to attract, retain and motivate a sufficient number of qualified employ…

Much of our future success depends on the continued availability and service of senior management personnel.

identical or confusingly similar to our brands’ names and marks, or using other proprietary intellectual property we own.

If the third-party aggregators that we utilize for delivery, including marketplace and delivery as a service, cease or curtail their operations, fail to maintain sufficient labor force to satisfy demand, provide poor…

Moreover, technology and consumer offerings continue to develop and evolve and we cannot predict consumer or team member acceptance of these existing and new technologies (e.g.

Certain IT Systems which are managed, hosted, provided and/or used by third parties may also be unreliable or inefficient, and technology vendors may limit or terminate product support and maintenance, which could imp…

We and our Concepts’ franchisees rely heavily on IT Systems to efficiently operate our restaurants and drive the customer experience, sales growth and margin improvement, which may be impacted by our initiatives to im…

The increasingly complex, restrictive and evolving regulatory environment at the international, federal and state level related to data privacy and data protection may require significant continued effort and cost, ch…

sophisticated and utilize tools and techniques specifically designed to circumvent security measures, avoid detection and obfuscate forensic evidence, which means we may be unable to identify, investigate or remediate…

There is no assurance that the security measures we take to reduce the risk of such incidents and protect our systems will be sufficient or that our cybersecurity risk management program and processes, including our p…

the country.

from time to time.

•the possibility that our interests and strategic direction do not align with those of acquired companies or other parties that maintain an interest in our investments.

In addition, new restaurants could impact the sales of our Concepts’ existing restaurants nearby, and the risks of such sales cannibalization may become more significant in the future as we increase our presence in ex…

Our growth strategy depends on our and our Concepts’ franchisees’ ability to increase the number of restaurants around the world.

Franchisee noncompliance with our franchise agreements and/or or brand standards may also adversely impact customer perception of our Concepts’ brands, including by failing to meet health and safety standards, to enga…

Furthermore, other viruses may be transmitted through human contact, and the risk or perceived risk of contracting viruses could cause employees or guests to avoid gathering in public, which could adversely affect res…

As of December 31, 2025, our total outstanding short-term borrowings and long-term debt was approximately $12.0 billion.

As a company dependent upon consumer discretionary spending, we (and our Concepts’ franchisees) are sensitive to macroeconomic conditions and consumer discretionary spending levels in markets where we and our Concepts…

country basis.

The Company, and our Concepts and their franchisees, are subject to numerous laws and regulations around the world which change regularly and are increasingly complex, including: the Americans with Disabilities Act in…

Many investors, members of the public, governmental authorities, and other organizations are focused on environmental, social and governance (“ESG”) matters, such as climate change, greenhouse gases, packaging and was…

Much of our future success depends on the continued availability and service of senior management personnel.

trademarks, many of which are registered in various jurisdictions, create brand awareness and help build goodwill among our customers.

employment practices and in digitally marketing our Concepts), data collected from minors, and biometric information.

If our IT Systems or the information systems of any of our Concepts’ franchisees, or other third parties which we interact, such as suppliers, distributors or third-party delivery providers, are disrupted or compromis…

We expect to incur significant expenses in connection with this process, and there are risks inherent with this process, including the potential diversion of management’s attention, interference with our ability to re…